Although the major financial indices have printed some positive numbers on the board, arguably most investors are still waiting out this unprecedented storm. Yes, reasons for optimism exist. At the same time, more than 16 million Americans have lost their jobs over a three-week period during the novel coronavirus crisis. That translates to losing 10% of the workforce, naturally conflicting with the urge to consider stocks to buy.
Still, bearish events generally allow patient investors to capture significant wealth; thus, several of my InvestorPlace colleagues urge writing a list of stocks to buy during this downturn. And according to Laura Gonzalez, associate professor of finance, California State University, Long Beach:
“Historically, bear markets last about two years, but this one is expected to be shorter, about a year. Central banks all around the world are working with their countries’ treasuries and executive officers to streamline stimulus packages. These packages must include support towards consumer spending beyond meeting basic needs of those that become unemployed because of the pandemic.”
Yet on the other end of the spectrum, you don’t want to haphazardly pick stocks. Before the 2008 global financial crash plummeted the consumer sentiment index to multi-year lows, warning signs were flashing over a two-year period. Today, the sentiment index plunged to 71 points over two months, suffering the worst month-to-month loss in the index’s history.
So, what should investors do? If you want to advantage these lows, consider stocks to buy that are well-prepared for a bear market, such as:
- Duke Energy (NYSE:DUK)
- American Water Works (NYSE:AWK)
- Waste Management (NYSE:WM)
- Costco Wholesale (NASDAQ:COST)
- Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL)
- Microsoft (NASDAQ:MSFT)
- IBM (NYSE:IBM)
- Teladoc Health (NYSE:TDOC)
- Sturm Ruger (NYSE:RGR)
Obviously, no one can predict how this will pan out exactly. Nevertheless, you stand a good chance of profitability with reliable, relevant names.
Strong Stocks to Buy: Duke Energy (DUK)
For those who are relatively unaffected by the coronavirus pandemic, you may want to count your blessings. While it’s hard to have perspective during an awful time like this, it could be a lot worse. For instance, utility firms like Duke Energy could be out of business. Not only would that obviously crater DUK stock, but many Americans would be without power.
Indeed, Duke Energy represents a great irony in our digitalization era. While we are incredibly advanced today, we wouldn’t go anywhere if the lights didn’t turn on. Simply, this concept made DUK stock a solid bet in any economic environment. But at this juncture, Duke is honestly one of the most vital stocks to buy.
Without utility firms, our mitigation initiatives would be almost unbearable.
American Water Works (AWK)
During this crisis, nearly the entire country has had an opportunity to reflect on what is truly important in life. While you can work the corporate grind to keep up with the Joneses, that won’t mean much if it sends you to an early grave. True, this is a stark statement. Nevertheless, it’s one of the primary reasons why I like American Water Works and AWK stock.
I’m not breaking new ground when I say that humans need food and water to survive. But while you can go without food for approximately three weeks, you can only last three or four days without water. Therefore, AWK stock is really a matter of life or death.
Furthermore, I like that management has made a commitment to keeping water services on, suspending billing-related service shutoffs. That human touch, along with a vital platform, makes American Water Works one of the “feel-good” stocks to buy.
Waste Management (WM)
Trash is a concept that nobody thinks about. However, in extraordinary times like this, we’ve all shifted our thought processes. Now, I believe I speak for everyone when I say that I have greater appreciation for our sanitation workers. When non-essential workers are relaxing at home binge-watching their favorite programs, these folks are making sure our society is operating as close to normal as possible.
Again, it gives you an awareness for organizations like Waste Management. Therefore, I’m not surprised that WM stock has witnessed a surge in positive momentum.
Over time, I expect this trend to continue. For one thing, history has shown that proper sanitation is vital to mitigating a pandemic. Second, Waste Management and its peers are letting us have a little bit of the old normal. As such, WM stock should enjoy steady upside, even if we hit a protracted bear market.
Costco Wholesale (COST)
As the coronavirus pandemic started impacting huge swathes of American society, many people began panic-buying food, water and emergency supplies. Naturally, retailers who specialized in these products, such as Costco Wholesale, experienced a dramatic lift. Admittedly, though, the ride in COST stock has been anything but stable. At one point, shares slipped into negative territory for the year.
Nevertheless, I believe Costco offers conservative investors much to like among candidates for stocks to buy. First, Costco members are more affluent than customers of rival big-box retailers. While estimates vary, you can expect the average member to earn a salary of about $70,000 or more. Theoretically, this should make COST stock more resilient to downward pressure.
Second, a permanent change in consumer behavior — similar to what happened to survivors of the Great Depression — may benefit Costco in the post-coronavirus era. With everyone receiving a harsh lesson in emergency preparedness, this should make COST one of the better stocks to buy.
Alphabet (GOOG, GOOGL)
Another opinion that I believe I share with nearly all Americans is that Alphabet, or more specifically the company’s search engine Google has been a lifesaver. With it, I was able to keep up with all the important news (since I cut the cord). Further, I was able to determine which small businesses were still open so that I could play my small part in helping my local community.
Of course, that’s a very small, perhaps trivial benefit of Google. But collectively, it makes the case for GOOGL stock during this unprecedented crisis.
Let’s not forget too that during this time, Alphabet has a “hostage audience” thanks to its YouTube brand. As much as I criticize our social media and vlogging culture, I’ve got to admit that platforms like YouTube have helped keep me sane. Therefore, I expect GOOG stock to move higher from its recent lows.
Finally, we must focus on the fact that bear market or not, we will get past the coronavirus pandemic. When we do, Alphabet can get back to work on its many innovations that made GOOG stock one of the best long-term stocks to buy.
I must concede that Microsoft is a tricky animal in this present circumstance. In early March, I stated that I liked MSFT stock as one of the most reliable stocks to buy. However, I emphasized being smart about it.
While the coronavirus had only infected 122 Americans at the time I wrote my piece, I warned that “it’s not just the casualties that we must worry about. Instead, it’s the economic damage, especially the broader supply-chain disruption, that casts a dark cloud.”
Like anyone, I typically enjoy being right. Unfortunately, this is one of those cases where I regret it.
So, how should investors approach MSFT stock? Personally, I would buy the dips, but keep the powder keg dry in case of unanticipated volatility. But in the long run, I value Microsoft’s incredibly relevant cloud services, along with its suite of business programs.
Some companies have used this pandemic as an opportunity to help and simultaneously bolster their corporate profile. One great example is IBM. In an email sent to me in early April by IBM Corporate Communications representative Tim Davidson:
“Earlier, IBM’s Watson Health unit made the IBM Clinical Development system available without charge to national health agencies to help accelerate the development [of] drug treatments — it’s technology used by pharma companies to reduce the time/cost of clinical trials by centralizing and organizing clinical trial details, and provides access to clinical trial data from any web-enabled device. The IBM software was first offered to Chinese health officials, and now is being provided to a wider network of national health agencies.”
That’s one reason to consider IBM stock in your portfolio of bear-market resistant stocks to buy. Another is that “Big Blue” has already endured years of lean performances. Shares appeared on the verge of a breakthrough before the Covid-19 pandemic struck.
Like Microsoft, IBM stock may experience some choppy trading ahead. However, this is a much more relevant name thanks to its key acquisitions and surprisingly strong cloud computing business.
Teladoc Health (TDOC)
Easily one of the most relevant stocks to buy during this crisis, Teladoc Health has seen its profile jump to meteoric heights. Through its app, patients can consult a doctor or medical professional via Teladoc’s ever-expanding network. Of course, the primary benefit here is that you don’t have to leave your home. Therefore, you can receive a consultation in the safest environment for you and your doctor.
Not surprisingly, TDOC stock is one of the few investments that have skyrocketed this year. However, what’s the likelihood that this is a one-trick pony?
From the devastation that our societies and economy have suffered, I’d say not likely at all. Generationally, the events of the Great Depression permanently changed those who lived through it. Thus, I don’t think it’s too much of a stretch to assume that concepts like social distancing or wearing masks in public will be ingrained among Americans living today.
If so, TDOC stock could continue surprising people.
Sturm Ruger (RGR)
Although it’s an incredibly cynical pick for stocks to buy, I honestly feel I’d be remiss if I didn’t mention Sturm Ruger. Sure, I understand the hesitance about investing in RGR stock. Even in the best of circumstances, firearms have always been steeped in controversy. But given the panic that we’re seeing, the situation could worsen if the economy fails to recover quickly.
In that case, I don’t think law enforcement can respond quickly enough to save your life. With a gun, it’s better to have it and not need it than to need it and not have it.
But wouldn’t RGR stock lose momentum if the economy recovers? Admittedly, it might. However, one factor that surprised me was that gun sales increased in every year of President Trump’s administration. That tells me that regular folks just don’t trust their government. Can you blame them?
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he did not hold a position in any of the aforementioned securities.